Written by Peter Ward, 5 September 2022
Complex and challenging, but can’t be ignored
Some while back I attended a meeting with an assortment of founder-led businesses that were exploring a transition to employee ownership. The number one issue named by almost all? Leadership succession.
On the face of it, this should be a straightforward process, one in and one out! We have a pretty comprehensive publication on the subject (‘The art of succession’) together with an impact assessment template. But while the process is important, I think there is something else that adds to the difficulty. We need to marry the needs and ambitions of three parties: the outgoing, the incoming and the organisation itself. Three parties in a marriage…
Let’s start with the outgoing party
I am sure we can recognise the head of a long-established business behaving as though s/he has cracked the secret of eternal life. Immortality has been bestowed upon them. But when the truth creeps up on them, the likelihood will be that choices for succession will have diminished: unsuitable or unprepared candidates; vulnerability to takeover to fill the leadership vacuum; or a chaotic scramble from various pretenders leading to uncertainty and a sub-optimal outcome.
Not a good look.
What is it that stops us from preparing for succession?
Is it because it is a reminder of mortality? Shakespeare has King Lear attempt to pass on his kingdom to his three daughters:
…'tis our fast intent
To shake all cares and business from our age;
Conferring them on younger strengths, while we
Unburthen'd crawl toward death.
And what a disaster that turned out to be.
We seem to associate handing over the reins with ending and departure, rather than renewal and continuity. And yet, along with death and taxes, there is certainty around the need for every leader to move on at some stage.
Or is it because our identity has become forever entangled with our position and we fear the ‘used to be…’ pre-fix. Is there a threat to our self-worth when we are no longer the CEO of an organisation?
Or is it simply that we have not given enough time to planning the next stage of our personal career? ‘Oh, I’ll be all right, I am planning a portfolio career. A few non execs, mentoring the next generation and the odd project from time to time.’ Really? For a whole career we would have been the driver of purposeful activity and yet, with all our experience behind us, we abandon the thought that in our later years we need some sort of unifying purpose to make sense of our future activities.
In an earlier piece, I wrote about ‘redirection’ and ‘refiring’ rather than retiring and I believe that a well-constructed succession process should be designed so that the outgoing party is seen to be ‘moving to’, rather than ‘retiring from’.
Now for the incoming party
Could it be that the outgoing party and the organisation are making assumptions about the ambition of their preferred candidate?
Putting ourselves into their shoes. What will be the questions they will have?
Do I really want to be the next leader? Have I given enough thought to the implications of taking on the role? Are my personal circumstances going to enable me to perform? Will I be able to attract the support that I will need to succeed?
And, importantly, will there be scope to run the organisation my way, or is there an expectation that I will run it just the way it has always been? Will the organisation accept that a new era will require new ways of operating, albeit remaining true to a core purpose.
Personal questions to be answered personally, rather than in preparation for the assessment process. There is an excellent book (‘The only leaders worth following’, by Tim Spiker) that identifies two attributes to good leaders (yes, just two, the complexity comes from mastering the art of leadership): inwardly sound and others focused. This is the ‘who?’ rather than the ‘what?’ of leading people. So the killer questions will be:
Am I fit, or do I want to get fit, to lead the organisation? Does its success and the success of the people in it, mean enough to me?
My colleague Alan Davies talks about committing to the commitment. It comes from his days as an international rugby coach where he expected individuals to ensure they were fit and ready to train as a team, rather than to postpone commitment to the day of donning the jersey. I think an individual needs to be clear about the answers to these questions for themselves, rather than to postpone until they are in front of the selection panel!
It is probable that a strong contender for a leadership position will need some support to help to get authentic answers to these questions and to avoid the distraction of the opportunity as it arises.
Now for the organisational perspective
A successful handover from one leader to the next will need to take account of the organisation’s needs. If we are managing a transition from a successful leader, there will be some apprehension in setting about the process. ‘Big shoes to fill’; ‘we’ll never find another that can do the job as well as…’
Perhaps we should not be looking for the same type of animal. But even if we are, perhaps we should compare them with the present incumbent as they were at an earlier stage of their career. What were they like when they first took up the post?
There are three components that need to be assessed in a candidate. Two pretty obvious:
Do they have the capability? We won’t do them, or the organisation any favours if they don’t have the intellect and the skills to succeed. Yes the skills can be developed, but the raw material will need to be there.
Do they have the right attitude? Will they embrace the way the organisation works, the principles and values that people live by? Absent a commitment to working in line with the organisation’s culture, their appointment could be a disaster.
The less obvious component: Are they prepared to carry the ‘spark’ that we believe is essential to the ongoing well-being of an organisation and its performance? There will be occasions when challenges need to be faced and it will be important that the leader is prepared to fight for the organisation’s survival. It is a lonely position when faced with an option of a short-term benefit but with the threat to longer-term survival.
Internal or external? The more rigour there is around a selection process, the easier it will be for the successor to succeed! If there is a continuity agenda, it makes sense for there to be a bias towards an internal candidate. But no harm in testing against external options. Properly conducted, a process that delivers an externally benchmarked internal candidate will give all parties comfort they have the right person. And if there is a change agenda? A bias towards an external candidate should not disqualify an internal candidate who can present a case for change. Properly conducted, a process to listen to internal voices as well as the external, should deliver an optimal outcome.
Who is responsible for selecting the new leader? Too often we hear that it is the board, or the chairman. I am not so sure. The ‘spark’ to which I referred earlier (and which is the essential element to get the corporate engine up and running) is usually held by the CEO and so their engagement is essential. And in fairness, the business leaders I have worked with, generally sponsor the succession activity to ensure that ‘their’ organisation will survive and thrive after they have gone. Of course, the board will need to have a say. In fact, they need to feel part of the decision as they will want to, and need to, support executive decisions and this will be easier if they are active throughout. There is a strong case for rigour throughout and, even if there is an obvious candidate ensuring they are fully tested by all parties.
I only mentioned the spark in an organisational context, but this is probably the unifying element for all three parties
The incoming will need to prepare for the challenge of holding it through thick and thin in future and
The organisation will need to know that the essence of the organisation is going to be preserved
What’s to stop early conversations exploring this element, testing the importance of the organisation’s purpose and commitment to it?
And a word about timing
As well as the key players, there are a number of moving parts in leadership succession and the final element that needs addressing is time. Incoming and outgoing parties will both need time to look into themselves to test fitness and their personal timing and development plans. The organisation will want to ensure continuity. So effective transition will take time.
When is the right time to plan for succession?
For effect, the first question I ask a new CEO, is ‘who is your successor?’. Usually get the response ‘that’s a bit harsh, I’ve only just arrived!’. But a trick I picked up from a company that, on appointment, asks the newly elevated Chief Executive to nominate their successor on day one. They require a name to be inserted into a sealed envelope, only to be opened should there be an abrupt end to the incumbent's reign. This name can be changed as often as needed, but there must always be a name in the sealed envelope. Too early? Unnecessary? The impact on the new leader is worth reporting.
‘It made me realise that I was only a steward of the organisation
and that I had a responsibility to keep my successor in mind’.
But for practical purposes, it makes sense to keep succession in mind constantly. There will be talent in the organisation that, properly developed over time, will have the potential to become a candidate. And it takes time to test them through different experiences and to provide the development that they will need to be successful.
Yes, succession is difficult. But ignoring it won’t make it simpler. It requires attention to the rational and emotional aspects of the decision. And given the impact it can have on an organisation’s wellbeing and performance, it is important to get it right.
Outgoing and incoming parties, rigour, timing and development. Emotional and rational. Yes, it’s complex
Image courtesy of: www.istockphoto.com
Copies of the Art of Succession and the accompanying impact assessment are available on application to Telos Partners LLP